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Nowadays, building an investment portfolio worth a million bucks isn't a small feat for most folks, financially or psychologically speaking. The secret recipe for reaching that milestone? Dedicate enough dough, consistently add more funds, and pick smart investments.
When it comes to stock pickings, keep an eye on Shopify (SHOP -0.21%). It's on a roll, and there's no braking in sight for its gains.
What's the Fuss About Shopify?
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If you've been around since the mid-'90s, remember when net surfing was new, dial-up connections were the norm, and e-commerce was a novelty? A small-time company called Amazon was chasing bookstores back then. Fast forward a few years, and the whole U.S. retail industry was left chasing Amazon's shadow.
Amazon is a double-edged sword, though. On the one hand, it set the foundation for an e-commerce juggernaut. On the other hand, its size and operations can make it a curveball for some sellers. Enter Shopify.
Launched in 2006, Shopify lets brands and merchants set up and manage their own online stores, allowing them to build relationships directly with their customers. This is the antithesis of Amazon, a platform that makes sellers compete with rivals and feeds the Amazon beast instead of their wallets.
With more than 3 million online stores using its services, Shopify helped facilitate the sales of $292 billion in goods and services last year and pocketed $8.9 billion for itself. Seeing those numbers rise by a quarter and two-sixths, respectively, from the previous year, it's safe to say Shopify's growth isn't slowing down anytime soon.
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Why Shopify's a Shot in the Arm for Investors
While the story's compelling, it's hardly breaking news. Shopify stock has nearly quadrupled compared to its 2022 post-pandemic low, and it's priced at over 80 times this year's projected earnings per share of $1.50. That said, the future looks so bright for this company that the market is willing to pay its projected earnings growth for the next few years and beyond.
Part of this growth stems from merchants recognizing that they can leverage online sales without entrusting the process to Amazon. With their own stores, they can gather more customer data and build stronger relationships.
And speaking of relationships, customers crave authenticity and personalization from the brands they support. Shopify can help businesses cater to this desire, while Amazon struggles to compete.
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Last but not least, the e-commerce market itself is still booming. The U.S. Census Bureau reports that only about 16% of retail spending is done digitally. As much as 84% is still done in brick-and-mortar stores. That leaves plenty of room for e-commerce to grow, and with Shopify leading the charge, it stands to capture a significant portion of that growth.
Investing in Shopify: Pros and Cons
As with anything in life, Shopify isn't a risk-free or perfect investment. Amazon could refine its merchant selection process, making Shopify's competition less intense. And Walmart's e-commerce site does accept a limited number of curated sellers, meaning Shopify isn't the only game in town.
Then there's the valuation issue. Shopify's stock price is steep, so even a slight hiccup in earnings could negatively impact its value.
keep going strong for at least the next several years.
Investing in Shopify is a long-term play, though. It's a company that's positioned to cash in on the growth of e-commerce, and with the right strategy, it could be a major moneymaker.
Sources:1. Shopify: Why It's Worth Considering as a Long-Term Investment2. How Shopify is Making E-commerce More Sustainable3. Shopify's Pricing Plans4. Shopify on Yahoo Finance5. Shopify's App Store
- If you're considering investing, Shopify's robust growth and position in the booming e-commerce market make it a compelling choice.
- For those interested in diversifying their investment portfolio, allocating funds towards tech stocks like Shopify can potentially yield significant returns.
- To gain a deeper understanding of Shopify's performance, you can utilize tools like 'show_benchmark_compare' on their in-line article pitch or analyze their performance on websites like Yahoo Finance.
- The 'collapse_on_load' feature might not be directly related to investing, but it could be useful for those who want to optimize their browsing experience while researching potential investments.